Labor impasse between ILA and USMX remains at a standstill

While there are no new major developments in the ongoing stalemate in labor negotiations between the International Longshoremen’s Association and the United States Maritime Alliance, that has not slowed down the public exchanges between the two parties as shippers Peak Season plans for moving cargo in and out of East and Gulf Coast ports hang in the balance.

While there are no new major developments in the ongoing stalemate in labor negotiations between the International Longshoremen’s Association (ILA), the largest union of maritime workers in North America, and the United States Maritime Alliance (USMX), an alliance of container carriers, direct employers, and port associations serving United States-based East and Gulf Coasts, that has not slowed down the public exchanges between the two parties as shippers Peak Season plans for moving cargo in and out of East and Gulf Coast ports hang in the balance.

As previously reported by LM, a major sticking point in the negotiations between the ILA and USMX has to do with how the ILA has to negotiate all Master Contract issues with the ILA Wage Scale Committee, which ILA President Harold Daggett said in an August letter to USMX Chairman and CEO James Capo is a democratically-elected committee that Capo has declined to address despite Daggett’s overtures to do so.

Another issue has to do with technology. USMX’ Capo maintains that the ILA is demanding that management guarantee a job for any worker even if new technologies eliminate a need for that position. Capo also noted that the current Collective Bargaining Agreement mandates that both sides negotiate over the impact new technology might have on the work force.

On August 22, negotiations between ILA and USMX dissolved, following July meetings, which ostensibly pointed to positive progress being made, when they announced agreements in principle on issues having to do with the introduction of new technology and automation and maintenance and repair of chassis within marine terminals and at off-pier facilities at the East and Gulf Coast ports.

Negatively compounding this situation is that the current contract expires on September 30, leaving little time for an agreement to be reached.

In a letter to Daggett from Capo dated August 31, the USMX chief addressed ILA’s previous demand for consideration by the ILA’s Wage Scale Committee.

Capo said he is not sure how the ILA can expect a final offer when the USMX “has been unable to engage in any comprehensive negotiations for a new contract, including economic issues.

“When we met during the week of August 20th, USMX presented the issues that we believed were critical to successfully reaching an agreement,” Capo wrote. “Those issues all center around inefficiencies that have crept into our operations over the years. I’m referring to archaic work rules and manning practices, and the system of guarantees and overtime pay practices that result in millions of dollars being paid for time not worked. These inefficiencies are causing many of our ports to become prohibitively expensive, harming our competitive ability and threatening the long term viability of our operations. USMX was hopeful that we would receive the same consideration from the ILA as we had given it on its critical issues. Instead, our presentations were simply rejected without any consideration, and when management objected to this lack of consideration, the ILA responded with a threat to strike.”

In concluding his letter, Capo explained that the USMX is ready and willing to engage in comprehensive bargaining to reach agreement on a new contract, including all economic issues, but he stressed that comprehensive bargaining must include substantive discussion on the aforementioned issues raised by USMX.

Both parties, he said, need to discuss putting programs in place that will correct these issues over a period of time.

“USMX does not believe it is in a position to present a final offer to the ILA for consideration by its Wage Scale Committee,” said Capo.

ILA, meanwhile, continues to hold its ground, explaining in an August 31 statement that while it hopes to avoid a strike on October 1 it is making preparations for one “if USMX holds to its last position of gutting wages and benefits.”

What’s more, the ILA’s Daggett said that that while the USMX boasts of having successfully negotiated contracts with the ILA without any disruptions to service since 1977, USMX does not mention that stability came with tremendous sacrifices made by the ILA and a spirit of cooperation between shippers and carriers on one side and ILA on the other.

“In a brief moment last week, USMX Chairman Jim Capo and his colleagues destroyed years of cooperation and trust,” Daggett said. “USMX demanded that the ILA give up its eight-hour guarantee that many port areas of the ILA have had for year. USMX also demanded that the ILA radically change the hard-fought contractual rules for the payment of overtime. These were items that should not even have been part of the master contract discussions, but USMX insisted that talks could not continue unless we agreed to negotiate these items.”

This situation has the full attention of various prominent supply chain stakeholders.

Last week, the National Industrial Transportation League (NITL) called on United States Department of Transportation Secretary Ray LaHood to get the ILA and USMX back to the bargaining table to hammer out a deal.

NITL President and CEO Bruce Carlton explained to LaHood in a letter that NITL members—many of whom are responsible for making freight transportation decisions using all modes in both the U.S. and globally and are importers and exporters that rely on these ports—would be adversely impacted by any shutdown of the nation’s ports.

Carlton wrote that with “the current contract set to expire on October 1, 2012…the League is extremely concerned about the dire consequences that would impact the nation’s freight system and our economy as a result of a bi-coastal port shutdown. We need to look no further than the devastating consequences of the west coast port lockout in 2002.”

This sentiment was echoed by National Retail Federation Vice President for Supply Chain and Customs Policy Jon Gold in a recent interview, when he said that he is hopeful ILA and USMX will resume negotiations by the September 30 deadline or soon thereafter.

“From our perspective, having a strike or shutdown would not do anybody any good from a port, shipper, importer or exporter perspective,” he said. “Shippers are making their final decisions in the next week to ten days regarding their Peak Season shipping plans and unfortunately all of these decisions come with an increase in costs. The West Coast shutdown costs the U.S. economy about $1 billion per day for ten days, and it took six months to recover from it.”

A Northeast-based shipper told LM that in anticipation of a possible strike her company has done an inventory review and arranged to bring in inbound inventory ahead of time, coupled with discussing alternate routes with the company’s freight forwarders.

That approach could be quite tenuous, though, she said, as many other shippers are taking similar steps.

“It is a tough situation,” said the shipper. “When you have lead times of 45 days in some cases, it can make it hard to plan inventory that far ahead in advance, especially when it became clear that this situation was not going to be quickly resolved. And there is not alternate sourcing in the U.S. [for our products].”

Dealing with long lead times, coupled with the pending September 30 deadline, creates unchartered waters for shippers in this case. This is likely to lead to shippers considering some modal shifts—to air for partial quantities, for example—to better navigate the labor standstill.

September 5, 2012

About the Author

Jeff Berman, Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

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